Correlation Between Bone Biologics and Pasithea Therapeutics

Can any of the company-specific risk be diversified away by investing in both Bone Biologics and Pasithea Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bone Biologics and Pasithea Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bone Biologics Corp and Pasithea Therapeutics Corp, you can compare the effects of market volatilities on Bone Biologics and Pasithea Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bone Biologics with a short position of Pasithea Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bone Biologics and Pasithea Therapeutics.

Diversification Opportunities for Bone Biologics and Pasithea Therapeutics

-0.48

Correlation Coefficient

Bone Biologics  Pasithea Therapeutics

Very good diversification

The 3 months correlation between Bone and Pasithea is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bone Biologics Corp and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea Therapeutics and Bone Biologics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bone Biologics Corp are associated (or correlated) with Pasithea Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasithea Therapeutics has no effect on the direction of Bone Biologics i.e., Bone Biologics and Pasithea Therapeutics go up and down completely randomly.

Pair Corralation between Bone Biologics and Pasithea Therapeutics

Given the investment horizon of 90 days Bone Biologics Corp is expected to under-perform the Pasithea Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bone Biologics Corp is 13.61 times less risky than Pasithea Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Pasithea Therapeutics Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.96  in Pasithea Therapeutics Corp on September 25, 2024 and sell it today you would lose (0.66) from holding Pasithea Therapeutics Corp or give up 22.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	51.11%
Values	Daily Returns

Bone Biologics Corp  vs.  Pasithea Therapeutics Corp

Bone Biologics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bone Biologics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pasithea Therapeutics

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Pasithea Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, Pasithea Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bone Biologics and Pasithea Therapeutics

The main advantage of trading using opposite Bone Biologics and Pasithea Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bone Biologics position performs unexpectedly, Pasithea Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pasithea Therapeutics will offset losses from the drop in Pasithea Therapeutics' long position.

The idea behind Bone Biologics Corp and Pasithea Therapeutics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.